Project Of ECON 104 The History And Market System Of Germany

The History and Market System of Germany
Name
Institution
The History and Market System of Germany
Germany has experienced exponential economic growth since 1990 following the reunification regime, despite the multiple episodes of recession. Murray, Skene, and Haynes (2017) explain that the gross domestic product of the former German Democratic Republic declined by about 30% with the value-added industry decreasing its net worth by 60%. Further, the scholars reveal that the three year period saw the rates of employment in Germany decreased by over 35%. Despite the negative economic position experienced by Germany in this period, the country’s move to transit from the ideologies of socialism cannot be undermined. For instance, Anzalone (2016) explains that ten years after the period of reunification, the country’s GDP per capita rose to over 65%. Dustmann et al. (2014) attribute such economic growth to the powerful involvement of the national government in fostering the generous transfer of resources from the western regions of Germany to the East; an aspect that increased the convergence per capita of the country. Anzalone (2016) reveals that in the period between 1989 and 2000, over 80% of the inhabitants of eastern Germany reaped massive benefits that included the increments in their levels of income.
Despite the tremendous growth experienced in the transition regime, Germany experienced sharp negative growth in its levels of convergence in productivity (Analone, 2016). Murray, Skene, and Haynes (2017) attribute such a position to the fact that the country gas not adequately recovered from the initial economic shock that was characterized with inadequacies in the levels of advancement of the underlying labor markets. For instance, Dustmann et al. (2014) explain that even after the period of reunification, the eastern side of Germany recorded its rate of unemployment at about 19% in 2000 while the western side of the country experienced a 27% unemployment rate in the same period. The current study seeks to undertake a critical analysis of the history and market system of Germany by reviewing the government’s role in the economy, fiscal policies, and economic indicators.
C1. Government’s Role in the Economy
The federal government of Germany plays a crucial role in fostering economic advancements. Murray, Skene, and Haynes (2017) explain that the government influences economic issues either directly or indirectly by institutionalizing policies aimed at fostering the advancement of its financial systems. The government institutions of Germany play a significant role in forming ample fiscal policies aimed at promoting economic growth and equity for both the inhabitants of the eastern and western regions of the economy. For instance, the move was taken by the federal government to institutionalize fiscal policies such as the top- down, and debt brake rules were influential in fostering the withdrawal of the fiscal stimulus that was triggered by the 1997 global economic recession. Anzalone (2016) explains that the regulatory regimes put in place by the government led to a significant reduction in the government’s deficit that was cyclically adjusted from about 4% of the overall GDP in 2010 ...